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Four Steps to Value-Creating Growth

  1. Earn the right to grow. Value creators pursue growth in the proper order: operational soundness first, followed by core reinforcement, and then expansion. Value-creating growers avoid expensive resuscitation of structurally unwinnable positions or divest these altogether to concentrate on areas of advantage and strong returns. They build margin through aggressive fund-the-future operational improvement. And they pursue profitable growth by favoring adjacent segments with high margins.
  2. Know your advantage. Companies do best when they define precisely what they do uniquely well and use that knowledge to edit portfolios and evaluate growth opportunities.
  3. Expand your field of vision. Companies have biases and comfort zones related to where and how to grow, which can constrain opportunity. Look broadly before selecting a growth plan. Are there faint signals in the core—such as unusually profitable customers or rapidly growing subcategories—that can be amplified? Beyond the core, consider adjacencies that deliver standalone growth, profit accretion, or some reinforcing benefit to the core. Finally, new frontiers of opportunity can exploit old advantages or assets in radically new ways.
  4. Integrate vision, choices, and actions. Clear strategies are needed to translate the company vision into concrete actions on where to play and invest. Companies create a culture of growth execution by chartering specific initiatives, defining new and needed capabilities, and aligning operating metrics and targets. This alignment of vision, choices, initiatives, capabilities, and metrics is a hallmark of valuable growers.

The consumer packaged goods industry is fast approaching a tipping point. In the US over the next five years, digital’s current 1% penetration most likely expands to five percent, but could quickly accelerate to as much as 10% with breakthrough innovation in delivery models. Companies without an effective digital capability risk stagnation, share loss, and even shrinking sales.

Consumer Products
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